The office of Congresswoman Maxine Waters (D-CA), chairwoman of the House Financial Services Committee, announced last week the development of new legislation specifically designed to mitigate the number of foreclosures associated with forward mortgage loans backed by the Federal Housing Administration (FHA).
The proposed bill, called the FHA Foreclosure Prevention Act of 2019 aims to strengthen requirements for FHA mortgage servicers, which includes increased oversight designed to allow homebuyers with FHA mortgages a fair chance at avoiding foreclosure.
“The Federal Housing Administration is critical to our housing market and helps to promote homeownership for underserved borrowers, including first-time and minority homebuyers,” said Chairwoman Waters in a press release announcing the bill’s introduction. “Unfortunately, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure.”
This is a primary reason why Waters introduced the FHA Foreclosure Prevention Act, she said, since it is designed to ensure that FHA servicers are in a position to assist families experiencing financial hardship, and allow them to avoid foreclosure so that they can remain in their homes.
According to the language of the bill, it would require the Department of Housing and Urban Development (HUD) to increase its oversight of FHA mortgage lenders in an effort to strengthen compliance with the FHA’s loss mitigation requirements.
“This bill would also establish a robust complaint and appeals process to provide borrowers the ability to adequately voice their concerns about unfair treatment,” the press release says. “Ultimately, this bill seeks to ensure that FHA borrowers have a fair opportunity to become current after defaulting on their loan.”
Recent high profile media coverage on the reverse mortgage industry from outlets like USA Today and the Wall Street Journal have called greater attention to the topic of foreclosures specific to the reverse mortgage product.
A recent national ad campaign commissioned by American Advisors Group (AAG) and starring the company’s spokesman Tom Selleck directly referenced the perception that exists among some in the public about reverse mortgage loans being designed to take seniors’ homes.
“I wouldn’t be here if I thought reverse mortgages took advantage of any American senior,” Selleck says in the ad. “Or worse, that it was some way to take your home. It’s just a loan designed for older homeowners, and it’s helped over a million Americans.”
See the full release, including the full text of the proposed bill, at the House Financial Services Committee website.